Correlation Between Electra and Israel Shipyards
Can any of the company-specific risk be diversified away by investing in both Electra and Israel Shipyards at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Electra and Israel Shipyards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra and Israel Shipyards, you can compare the effects of market volatilities on Electra and Israel Shipyards and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Electra with a short position of Israel Shipyards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra and Israel Shipyards.
Diversification Opportunities for Electra and Israel Shipyards
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electra and Israel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Electra and Israel Shipyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Shipyards and Electra is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Electra are associated (or correlated) with Israel Shipyards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Shipyards has no effect on the direction of Electra i.e., Electra and Israel Shipyards go up and down completely randomly.
Pair Corralation between Electra and Israel Shipyards
Assuming the 90 days trading horizon Electra is expected to generate 0.8 times more return on investment than Israel Shipyards. However, Electra is 1.25 times less risky than Israel Shipyards. It trades about 0.0 of its potential returns per unit of risk. Israel Shipyards is currently generating about -0.03 per unit of risk. If you would invest 20,713,000 in Electra on November 22, 2024 and sell it today you would lose (55,000) from holding Electra or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra vs. Israel Shipyards
Performance |
| Timeline |
| Electra |
| Israel Shipyards |
Electra and Israel Shipyards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra and Israel Shipyards
The main advantage of trading using opposite Electra and Israel Shipyards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra position performs unexpectedly, Israel Shipyards can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Israel Shipyards will offset losses from the drop in Israel Shipyards' long position.| Electra vs. Alony Hetz Properties | Electra vs. Melisron | Electra vs. Shufersal | Electra vs. Israel Discount Bank |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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